Which of the following statements is TRUE?
A) Market power is the ability to raise price and sell more units of a good.
B) Market power may result from government regulations or patent protection.
C) A monopoly is a firm without market power.
D) All of the answers are correct.

Question

Quizplus · Accepted Answer

Market power can result from various factors such as government regulations, patent protection, or high barriers to entry. A monopoly, by definition, is a firm with complete market power where it is the only supplier of a particular good. Therefore, C is false. A is also false as market power does not necessarily mean being able to sell more units at a higher price, but rather the ability to set prices above marginal cost. Therefore, the correct answer is B as it correctly identifies a source of market power.

Which of the Following Statements Is TRUE